Unlock super to invest in SMEs

The director of an alternative SME lender has expressed frustration at Australia’s superannuation wealth being locked up in shares and property instead of being used to fund growing SMEs.

The director of an alternative SME lender has expressed frustration at Australia’s superannuation wealth being locked up in shares and property instead of being used to fund growing SMEs.

“There's this innovation push, which is fantastic, but where is the capital to make it happen?” Dermot Crean, director of invoice trading platform InvoiceX, told My Business.

“Australia has a world-class position – we've got $2 trillion in superannuation, we're the third biggest financial services market in the world, so there's no shortage of capital – it's just in the wrong place, and there isn't the mechanism to get it out and put it in the right place.”

Mr Crean points to the UK as an example of government putting words into action to support successful small businesses to grow.

“The UK government, in September 2012, Vince Cable – who was the former chief economist of Shell – said 'there is a market failure in business lending and we need to actually do something about it'. So they created the British Business Bank, which is there to foster all this alternative finance,” he said.

“This isn't about grants, it isn't about handouts; the government in the UK put a fairly miserable GPB100 million to work in the alternative finance sector – the power of that has been tremendous. And they've made a great return on their money too. So politically, I don't know why this message isn't top of mind [here in Australia].

“The Treasury in the UK is putting out statistics – they just put one out recently – about the amount of money that has been put to work in the economy, and the economic effect of this is something like GBP520 million has gone in just last year, and the powerful effect that has had on job creation and everything else.”

Mr Crean’s co-director, Steve Yannarakis, said that while the federal government’s innovation package is a welcome addition to drive further innovation in Australia, it does little to help existing small businesses expand the current reach of their products and services.

“Getting down in the trenches and being around these businesses around the country, we find there are perfectly good businesses already there, and they've only got one problem, and that is getting their money [to grow],” he said.

“If that could be solved, there is actually a lot of innovation already there.”